Legislative Briefs 2/2/21

Legislature passes tax relief bill

The Senate unanimously passed a tax relief bill Jan. 28 following unanimous passage by the House a week earlier.

House Bill 65 exempts residents who collected unemployment benefits in 2020 from having to pay income taxes on the money. The bill now awaits Gov. John Carney's signature.

The bill is expected to save Delawareans roughly $21 million this year by allowing tax filers the ability to subtract all unemployment benefits received in calendar year 2020 from federal adjusted gross income, which is used to calculate state personal income taxes.

More than 100,000 Delawareans filed for unemployment benefits last year and will qualify for the exemption. Although the unemployment rate has fallen in recent months, thousands of residents are still unable to secure jobs during the ongoing crisis.

The bill also provides tax relief to employers by freezing employer assessment rates at 2020 levels. According to the Division of Unemployment Insurance, thousands of businesses will benefit from the freeze. Those paying the new employer tax rate of 1.8 percent will save an estimated $264 per employee in 2021.

Protections added to state Equal Rights Amendment

Discrimination protections were expanded in Delaware's Constitution Jan. 28 after unanimous agreement in the House.

Senate Bill 31 adds the words “race, color and national origin” to the equal rights clause of Delaware’s Constitution first created by the 150th General Assembly to guarantee protections against discrimination based on sex.

The first leg of SB 31 unanimously passed both chambers of the General Assembly in 2020. Proposed amendments to the Delaware Constitution must be passed by two consecutive General Assemblies – and two-thirds of the members in each chamber – before becoming law.

The Senate unanimously passed the bill Jan. 21. As a constitutional amendment, the bill does not require the governor's signature; it takes effect after final passage.

Legislation introduced to stop unfair business practices

Legislation introduced Jan. 28 would give the state attorney general power to intervene against unfair business practices.

House Bill 91 would amend the Consumer Fraud Act to explicitly add unfair practices. Passed in 1965, the state Consumer Fraud Act made deceptive business practices illegal; however, Delaware is one of only six states that do not also explicitly ban unfair or unconscionable practices.

Federal law has prohibited unfair business practices since 1938, and the laws of 44 states and the District of Columbia prohibit unfair or unconscionable practices. Because of Delaware’s weaker Consumer Fraud Act, consumers – and businesses acting as consumers – are vulnerable to unethical or injurious actions that they would be shielded from in other states.

“Some issues are complicated; this one is not,” said Attorney General Kathy Jennings. “There is no valid defense of unfair or unethical business practices. Most people assume that they are already illegal, but Delaware is one of the only states where that isn’t explicitly the case. That hurts consumers, seniors, honest businesses, and competitive markets, and it sends the wrong message to anyone thinking of relocating to Delaware.”

Following the Cambridge Analytica scandal – in which a British consulting firm was allowed to collect millions of Facebook users’ personal information without their consent – the Federal Trade Commission, the attorneys general of California and the District of Columbia, and others took enforcement actions against Facebook. Delaware was unable to take similar action on this scandal, and in general, Delaware’s lack of a prohibition on unfair practices prevents it from participating fully in many multistate investigations on consumers’ behalf.

Price gouging would also be made illegal by HB 91. While price gouging was banned during the pandemic under Gov. John Carney’s emergency powers authority, Delaware is one of the only states that lacks permanent authority to take action against price gouging in a state or national emergency.

Other unfair acts that could be covered by HB 91 include: high-pressure sales tactics, coercive conduct (e.g., conditioning return of a down payment on a consumer’s agreement to forfeit part of it), unequal knowledge between consumers and merchants (e.g., defective merchandise, dangerous products or sales tactics, failure to provide copies of contracts), hidden unaffordability (e.g., loans that direct consumers to pay a minimum amount set at a level such that the consumer will never pay off the loan), unethical post-sale tactics (e.g., failure to honor refund policies or warranties, charging for goods or services that consumers didn’t request), and advertising adult products to children.

Legislature approves tax increase for Sussex Tech

Both the House and Senate approved a bill that will raise county taxes over the next three years to pay for Sussex Tech.

A substitute bill for Senate Bill 52 was unanimously passed by both houses allowing for a 3-cent increase from 23.5 cents in 2020 to 26.5 cents in 2021. The tax rate will increase 1 cent each year up to 29.5 cents.

In 2015, legislators curtailed Sussex Tech's budget growth and student enrollment amid funding issues at the school. At the time, Sussex Tech's enrollment was 1,550, a number that has been decreased to 1,250.

SB 52 allows enrollment to increase to 1,300 for the 2021-22 school year, 1,350 for 2022-23, 1,400 for 2023-24, and 1,450 for 2024-25 and all years after.

The legislation outlines preferences for siblings and children of personnel, and also prohibits Sussex Tech from denying applicants whose GPA falls below the 70th percentile or who have failed any eighth-grade courses.

Before enrollment and tax rate changes were made in 2015, Sussex Tech had drawn criticism from Sussex County school districts for poaching top academic students while excluding students who would benefit from learning a trade. The legislation does not address admissions regarding college-bound students and those in the trades.

The bill awaits Gov. John Carney's signature.

Renewable energy bill passes Legislature

The state Legislature passed an update to Delaware's Renewable Portfolio Standard that will increase the state's renewable energy goal to 40 percent by 2025.

The portfolio promotes the use of renewable energy while reducing carbon emissions. Delaware's current goal is 25 percent by 2025. Under the bill, the percentage of renewable energy from solar photovoltaics would nearly triple from a target of 3.5 percent by 2025 to 10 percent by 2035.

Senate Bill 33 passed the House by a 29-12 vote Jan. 28 following passage in the Senate Jan. 21 by a 13-8 vote.

“Companies’ practices have taken a heavy toll on our environment for far too long. Especially here in low-lying Delaware, where sea-level rise is a top concern, it’s critical we take action to protect our natural resources and prevent further ecological damage,” said Rep. Edward Osienski, D-Newark, the lead House sponsor. “Renewable energy portfolio standards have proven to be an effective solution to transitioning away from harmful fossil fuels toward clean, green energy like solar, wind and geothermal. Because we’re on target to hit 25 percent by 2025, it makes good sense to establish new goals for our RPS program.”

SB 33 awaits Gov. John Carney's signature.